May 28 (Reuters) - Synopsys ( SNPS ) forecast

third-quarter revenue largely above Wall Street estimates on

Wednesday, driven by strong demand for its semiconductor design

software as companies ramp up spending on AI chips.

Shares of the company rose 3.8% in extended trading, after

falling about 10% during the session following a media report

that said the Trump administration had ordered U.S. chip design

software firms to cease sales to Chinese groups.

Synopsys ( SNPS ) CEO Sassine Ghazi said on a post-earnings call that

the company had not received a letter from the U.S. Department

of Commerce's Bureau of Industry and Security (BIS), which

enforces export controls.

"We are aware of the reporting and speculations, but

Synopsys ( SNPS ) has not received a notice from BIS. So our guidance

reflects our current understanding of BIS export restrictions as

well as our expectations for year-over-year decline in China,"

Ghazi said.

While the company has been seeing a slowdown in China,

which typically accounts for about 16% of its annual revenue,

robust demand from other regions, including Europe and South

Korea, helped offset the weakness.

It reported revenue of $1.60 billion in the second

quarter ended April 30, in line with estimates.

The company projected current-quarter revenue between

$1.76 billion and $1.79 billion, while analysts on average

expect $1.76 billion, according to data compiled by LSEG.

In a further escalation of regulatory pressure on

Synopsys ( SNPS ), the U.S. Federal Trade Commission said on Wednesday

that it would require Synopsys ( SNPS ) and software firm Ansys ( ANSS )

to divest certain assets to address antitrust concerns

surrounding their $35 billion merger.

However, during the earnings call earlier, Ghazi said

that the company has regulatory clearances for its proposed

merger with Ansys ( ANSS ) in all jurisdictions except China.

"We are working cooperatively and actively negotiating

... to secure China regulatory clearance and we continue to

anticipate closing in the first half of this year," Ghazi said.

Synopsys ( SNPS ), which counts companies such as Nvidia ( NVDA )

, Intel ( INTC ) and Qualcomm ( QCOM ) among its

partners, provides the software and hardware used to design

advanced processors.